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Is salary space an issue for Galaxy? Who knows?
by Ridge Mahoney, February 7th, 2012 12:29AM

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TAGS:  los angeles galaxy, mls

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[MLS CONFIDENTIAL] Doing the math in MLS is like running blindfolded down a dead-end alley: just as you get up to speed, you crash headlong into a great unknown, reel backward from the impact, and crumple to the ground bleeding, battered, defeated.

The MLS Players Union annually releases player salaries, and from those numbers the more zealous of MLS followers will desperately try to figure and finagle which teams have the most cap room to acquire more talent, and -- God forbid! -- those teams that might be cheating. The great unknown is, of course, allocation money, which is parceled out to teams and traded by teams without the amounts ever officially disclosed.

(Those salary numbers are not the actual figures used to calculate the salary-budget charges, either, since a small percentage for licensing is added in, and other payments can alter it further.)

League rules allow teams to use allocation money in the following situations:

* To sign players new to MLS (that is, a player who did not play in MLS during the previous season).
* To re-sign an existing MLS player, subject to League approval.
* To “buy-down” a player’s salary budget charge below the League maximum of $335,000.
* In connection with the exercise of an option to purchase a player’s rights or the extension of a player’s contract for the second year provided the player was new
to MLS in the immediately prior year.”

For the past few years, the minimum amount of allocation money that could be used in a trade was $75,000, but a team can use any amount to re-sign or acquire a player. No matter the amount of allocation money a team may have available, a high-priced player cannot count for less than $150,000 against the salary cap.

As an expansion team, Montreal is flush with allocation money, though just how flush isn’t known. New teams get a big chunk -- supposedly somewhere between $500,000 and $1 million since the expansion frenzy began in 2005 -– and smaller amounts are given to teams that miss the playoffs and, like the Galaxy, qualify for the Concacaf Champions League.

Since coaches and general managers are very reluctant to mention allocation figures even off the record, wild speculation and guesstimation accompany each such transaction. A leaked figure is subject to suspicion. The team that gets the money may inflate the figure, the team surrendering cash might do the opposite. Shocking, but true.

To cite one such example, Houston coach Dominic Kinnear once bristled when told of a number he supposedly relinquished in a deal. “Not even close,” was his terse reply. Was he trying to set the record straight, or further muddying the waters? Or both?

No doubt fans, and also enemies, of the Galaxy will be furiously punching calculators to compute how, or if, the defending MLS Cup champion can possibly squeeze its three Designated Players – Landon Donovan, David Beckham and Robbie Keane – into the $2.81 million salary cap (salary-budget charge in league parlance) allotted to teams for the 2012 season.

Since winning MLS Cup, the Galaxy has taken steps to move money on and off its roster. The much ballyhooed re-signing of Beckham – despite a reported increase in his annual salary from $6.5 million to $7.5 million – is a wash, since he still counts for $335,000 against the cap. Keane will count for the full amount ($335,000) this season after costing $167,500 last year as a midseason arrival, but as mentioned, the Galaxy was already carrying Juan Pablo Angel – who was traded to Chivas USA -- at the full charge for 2011 season, so the net effect of Keane directly is actually zero.

(As a team with three DPs, the Galaxy pays a penalty of $250,000 that is distributed to teams with less than three DPs.)

By bringing back Edson Buddle into the fold, even if he costs slightly more than the $178,488 salary he earned in 2010 before leaving for Germany, the Galaxy probably hasn’t crunched its salary cap to any great extent, because of player departures as well as amassing allocation money.

Though the amount wasn’t disclosed, protecting keeper Donovan Ricketts rather than exposing him in the Expansion Draft – even though he wound up in Montreal anyway – made a lot of sense when he was traded not for players or draft picks, but allocation money. Yet without incorporating that undisclosed amount, a look at the salaries shed by the Galaxy in the past 2 ½ months gives credence to notion it has some room to work with:

Donovan Ricketts (traded) $170,000
Chris Birchall (contract expired) $144,000
Gregg Berhalter (retired) $96,000
Frankie Hejduk (option declined) $96,000
Juninho (loan terminated) $90,000
Jovan Kirovski (retired) $84,000
Increase in salary cap (from $2.675 million to $2.81 million): $135,000
Total of above six salaries and cap increase: $731,000

The other variable in this calculation is seldom mentioned. League rules also specify that “some” acquisition costs count against the cap, and since Keane’s rights were purchased at a cost of 4 million euros – approximately $5.2 million – it’s impossible to know how that cost can be incorporated into an MLS salary cap, even if it is prorated over the three MLS seasons (2011, 2012, 2013) of Keane’s contract.

No doubt loaning him to Aston Villa will soften some of that hit but cynics will, of course, claim that MLS can fudge its rules and only count against the cap what the Galaxy can afford. Or there’s a provision that DPs who cost a lot in real dollars don’t count for but a smidge in MLS money.

Though the monetary specifics won’t be known, what roster moves the Galaxy make in advance of the MLS compliance date (March 1) are going to be interesting, especially if it signs a foreign defender to replace the injured Omar Gonzalez.

That's the game behind the game.



2 comments
  1. Mike in SoCal
    commented on: February 7, 2012 at 12:31 p.m.
    I've always thought the MLS salary rules are run by the Wizard of Oz locked away in an MLS back office, yanking levers and pulling ropes. Basically, the league is going to reign in teams until they are ready to spend more due to better local tv contracts, bigger attendance, more merchandise sales, etc... The Galaxy have become the first MLS team to reach that 'next level' type threshold, the league is not going to stand in their way (I would guess). They are the current standard bearers for the MLS and will help move the league forward with them. With the increased revenues they are generating if they need a little extra wiggle room to say sign a defender to replace Omar, the league will get in their Oz-room and flick levers and pull ropes and give them a way to get it done. Much like the 'Beckham rule' was created. Maybe, they will create an 'Omar rule' and let teams replace players with season-jeopardizing injuries, for instance. Anyways, MLS fans need to root for the Galaxy to succeed, they will carry the brand with them. When Brazilian and English footie fans follow their games, they are also watching the rest of the MLS play. When the Galaxy succeed at CCL, and hopefully win it and qualify for the Club World Cup - that is a huge accomplishment for the entire league. The Galaxy are legitimate contenders to do so, the league can't not let them address their personnel needs - especially when it's based on some mysterious set of rules no one but league offices even know exactly.

  1. Jack Niner
    commented on: February 7, 2012 at 7:56 p.m.
    And, no one outside of the DP's is making much of a living playing soccer in the upper division league MLS. Someone needs to do an inside story of how a lot of the guys are living in some of the most expensive cities in America (LA, NY, Seattle, Van.)


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